The Civil Aviation Safety Authority has issued a warning over the legality of companies sharing their Air Operator's Certificate (AOC) with another organisation.
The practice of sharing or "franchising" an AOC has been common in the aviation industry for several years, and occurs when one company agrees to provide operational oversight to another using just one AOC.
Examples of AOC sharing are when a start-up company is ready to begin operations, but wants to avoid the costs of getting their own AOC; two flying schools using the same Chief Flying Instructor and when the second company wants to operate an aeroplane that is not on their own AOC.
The issue has vexxed CASA for many years, particularly given that the amount of oversight of the second company can often be very minimal.
"CASA has become aware that some aviation companies are using their air operator’s certificate in an ‘umbrella’ arrangement for other aviation companies," CASA CEO and Director of Aviation Safety Shane Carmody said in his November CASA Briefing newsletter.
"The holders of air operator’s certificates and other authorisations are allowing other companies to conduct operations under their certificate. CASA considers this is a breach of the Civil Aviation Act and/or regulations by both the certificate holder and the company which does not hold a certificate."
In 2006, then CASA CEO Bruce Byron issued a ruling on "franchising" that found the practice breached the Act. In that ruling, CASA pointed out that the Act requires that all operations on an AOC must be conducted
- in accordance with the systems of an AOC holder
- under the oversight and management of the key personnel of that AOC holder
- using the facilities and documentation of that AOC holder.
The ruling went on to state that under franchising arrangements, it is possible that operations at the second company will not be conducted within the first company's AOC, and therefore the Act will not be complied with.
"The ruling does not permit an air operator’s certificate holder to enter into an arrangement for a third-party company to conduct operations under its air operator’s certificate," Carmody points out.
"Companies are advised to ensure their operations are conducted lawfully and they are encouraged to seek written advice from CASA about these types of arrangements."